Oil spill won't ruin economy

WASHINGTON-- The BP oil spill has hammered the fishing and tourism industries along the Gulf of Mexico. But it appears the economic damage to the rest of the nation will be limited.

WASHINGTON-- The BP oil spill has hammered the fishing and tourism industries along the Gulf of Mexico. But it appears the economic damage to the rest of the nation will be limited.

Analysts say the spill will reduce economic growth by about only one-half of 1 percentage point this quarter, and even less during the second half of the year. For an economy as large as the United States' - $14.6trillion - a $73billion cut is barely a nick.

Here's why:

• Spending on tourism is moving elsewhere. Beachgoers who might have headed for Pensacola, Fla., for example, are looking toward Atlantic coast sites such as Myrtle Beach, S.C. Gulf hotel rooms going unused by tourists are being booked by cleanup crews.

• Damage to Gulf fishermen might last, but, as with tourism, the Gulf's commercial fishing makes up only a fraction of the U.S. economy. And most of the fish eaten in the United States are imported, said Michael Feroli, an economist at JPMorgan Chase.

• The Gulf energy industry, which makes up about 10 percent of the regional economy, is not vital to the nation's. The six-month ban on deepwater drilling that a judge blocked last week would deduct only about 0.03 percent from the U.S. economy.

• If deepwater drilling becomes too much of a financial burden and oil companies move their rigs abroad, coastal communities in Louisiana and Texas would be hurt. But the national impact would be slight because of how small a portion of U.S. oil consumption the Gulf supplies - less than 10 percent - said Ed Friedman, economist at Moody's Analytics.

The local communities will suffer damage to their economies and environments for years, even if the spill is capped this summer. Wells Fargo economist Mark Vitner estimates that up to 250,000 Gulf jobs in fishing, tourism and energy will be lost in the second half of the year.

The new jobs in cleanup won't make up for what's been lost, and probably will pay less, Vitner and others say. Consumers in the region will spend less as a result.

That will lower the U.S. economy's growth rate in the July-to-September quarter by a slight 0.2 percentage point, Vitner said. He envisions little or no effect on growth in the fourth quarter of the year, assuming the leak is plugged by then.

Some cleanup jobs are paying $15 to $18 an hour. By contrast, the thousands of rig workers idled by the deepwater drilling moratorium earn up to $1,800 a week - roughly $45 an hour, trade groups estimate.

Fishermen earn less - on average about $13 an hour, the U.S. Bureau of Labor Statistics says. But the destruction of fishing industry jobs is still taking a heavy toll.

BP has committed to a $20billion fund for oil-spill victims. In addition, it will pay $100million into another fund to help oil workers sidelined by the moratorium on deepwater drilling. And President Barack Obama has pledged additional resources to the coastal states, though he hasn't provided details.